Like owning a home or a vehicle, it’s often cheaper to make minor repairs ahead of time in an effort to keep them from growing into costlier issues. Simple things like caulking and sealing certain areas, changing HVAC filters, painting, and replacing are maintenance moves that might only take a few dollars or a few minutes to complete, but could prevent repairs that run in the hundreds or even thousands of dollars to make down the road.
Well, much the same can be said of preventative maintenance conducted on our personal finances. And making certain moves when it comes to our money helps us avoid – or at least handle more easily – other, more major issues when they arise.
Funding a reserve account
A reserve account can be more than just an emergency fund in the bank. While an emergency fund is certainly a good thing to have available, it’s not the only option.
We tend to keep an emergency fund available, but we also build a “reserve” line into our budget each month. We budget about $200 a month for this amount, and we typically carry either all or a portion of it over to the next month if we don’t use it or use all of it. This money helps cover smaller, unexpected costs that arise monthly – school and kid costs, minor vehicle and home repairs, etc. – and prevents us from having to dip into our main emergency fund other than for true emergencies.
Regular net worth updates
We update our net worth at least monthly, if not several times a month. By reviewing savings levels, investment progress, and retirement accounts, we can see how these various assets and asset classes are performing. This way, if a particular asset is underperforming, we can make adjustments before it’s too late. On the other hand, if a certain asset or asset class is outperforming, we can maximize returns in that area while things are on the upswing.
There are also several more minor preventative measures we take regarding our personal finances. One of the first is to do much of our regular weekly shopping in cash. In this way we avoid situations like the one involving the compromising of up to 70 million Target shoppers’ data at the end of 2013.
We also conduct regular credit checks, check bank and other accounts regularly, and review account and billing statements closely to ensure they are error and issue-free. This way, should we encounter a problem, we do so in a timely manner and are able to undertake resolving it immediately.
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The author is not a licensed financial professional. This article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.